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Data plans: the barrier to mobile Internet adoption

While the buzz around mobile Internet continues to grow, we look at the …

The announcement of the iPhone generated a metric ton of buzz, not just around around Apple's highly-anticipated entry into the cellphone market but also other smartphone devices such as the Samsung Blackjack and the Motorola Q. Although our readers have shown strong interest in such Internet-friendly devices, widespread adoption still faces a number of challenges. Our quick survey of the marketplace shows that mobile Internet service is priced prohibitively high, and this will likely constitute the major barrier to mobile Internet adoption, even more than the cost of the devices themselves.

Unlimited data service cost—the ideal solution for someone who plans to use the Internet extensively via one of these devices—has a somewhat wide range across the major service providers in the US, and depends highly upon which device is being used and on what network. For instance, look at what it costs to use a smartphone from the major carriers with a voice plan. AT&T/Cingular's data plans range from as low as $19.99 per month for the SmartPhone Connect Unlimited Plan (which works with a limited selection of devices) to $39.99 for the PDA Connect Unlimited plan (for other devices, such as the Samsung Blackjack). When added to a voice plan, the total cost (with a 450-minute, $39.99/month plan) comes to somewhere between $60 and $80.

T-Mobile Internet can be added onto voice packages for $29.99 for use with a supporting phone—which comes with the added feature of being able to use T-Mobile's WiFi HotSpots anywhere they are offered, with any WiFi device. This brings the total voice + data package with the lowest-available plan (300 minutes for $29.99/month) to $60. Coupled with a 600-minute voice plan for $39.99, the total is $70.

Verizon's data plan offerings offer even more simplicity, but some of the highest prices. There is no way to get a data-only plan without voice (on at least one phone), and the prices for both PDA/Smartphone plans and BlackBerry plans are the same. For $79.99 per month, users can get 450 minutes and unlimited data usage. When purchased alone (provided you have voice somewhere on your account), the plans are $45-$50 for unlimited data. Verizon also notes in their contracts that "unlimited" is actually capped at 5GB a month. Other plans are believed to have similar limits on their "unlimited" service.

Finally, Sprint's data offerings include the $15 to $25 addition of the Sprint Power Vision packs (with varying levels of multimedia access, but all with unlimited data) to any phone plan with supporting device. Using the 450-minute $39.99 plan, that brings the total price to the $55 to $65 range.

Ultimately, users can expect to pay anywhere between $55 and $80 for a data+voice plan. For that price, you get something between "mediocre" and "acceptable" data speeds—depending on what type of network, location, and network congestion at the time of use. But of course, you get the convenience of mobile Internet.

Internet's so nice, pay for it twice!

Our own sampling of reader opinion leads us to believe that spending an extra $60+ or so every month to use a device that can access mobile Internet is still too pricey to be attractive to savvy users. It's no coincidence that many users on these mobile Internet plans are on them because their employer pays for them.

If early adopters are a little skittish, average consumers are likely to also balk at the cost, even when something as buzz-worthy as the iPhone comes into play.

This comes down to a chicken versus egg problem. The high data plan costs are relatively high because of the small number of users making use of the services. Dropping prices could attract substantially more customers—but would it be enough to enough to cover the costs of these networks? At some point, the carriers will have to be more aggressive with their pricing, because as long as the data plans remain high, widespread adoption will be low.

So where does that leave us? We're waiting for a catalyst, a must-have device that will throw the mobile Internet providers into a vicious competition for users that will see them devoting their attention to more than just business users and corporate accounts. Will the iPhone be that device? Maybe. There are plenty of big players trying to make this happen, and right now both Microsoft and RIM have a sizable lead on Apple, and Symbian isn't doing too bad, either.

Jacqui Cheng
Jacqui is an Editor at Large at Ars Technica, where she has spent the last eight years writing about Apple culture, gadgets, social networking, privacy, and more. Emailjacqui@arstechnica.com//Twitter@eJacqui